Chile’s central bank surprises markets with ‘out of the blue’ rate cut

Lower growth and weak commodity prices push board to cut rates by 50 basis points

Central Bank of Chile
The Central Bank of Chile
Photo: Central Bank of Chile/Wikimedia Commons

The Central Bank of Chile surprised markets on June 7 by cutting the policy rate by 50 basis points to 2.5% on lower growth and commodity prices.

Rate-setters think “the economy has not recovered enough to close the activity gap and boost inflation”. Therefore, the board unanimously “deemed [it] necessary to recalibrate the monetary impulse”, said the policy statement.

The move surprised markets and analysts, as it sharply interrupted the policy normalisation started by the central bank in

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